By Jessica Domel
Field Editor

A combination of high inputs, low prices and no safety net could spell disaster for not only American cotton farmers, but for the Texas and U.S. economies.

More than 100 lawmakers, including Congressman Mac Thornberry of Texas, sent a letter to the U.S. Department of Agriculture (USDA) and Secretary Tom Vilsack urging them to designate cottonseed as an “other oilseed” so growers will qualify for farm bill safety net programs.

The American Farm Bureau Federation (AFBF) board of directors has also sent a letter urging USDA to make the designation.

Fourth generation cotton farmer Dan B. Smith of Lockney explains, via testimony to the U.S. House Committee on Agriculture, why action is needed.

“The 2014 Farm Bill gave us a totally crop insurance-based support program for cotton and removed our crop from Title 1,” Smith wrote.

Farm bill coverage is currently unavailable to U.S. cotton farmers following the Brazilian Cotton Case.

Brazil alleged the U.S. gave unfair subsidies to its cotton growers.

As a result, U.S. officials promised not to give direct subsidies to cotton farmers.

Losing coverage couldn’t have come at a worse time for cotton growers.

Cotton prices have decreased dramatically.

“The lack of a safety net has made profitable cotton farming much less likely,” Smith wrote.

Cotton production is infrastructure-intensive. Farmers rely on a network of capital-intensive businesses to process cotton.

“From gins at the local level to textile plants at the end of the chain–all must be profitable to stay in business,” Smith wrote.

Farmers need handlers and processors for their cotton and cotton products, who in turn need the cotton flowing into the market.

“At present, all levels of our domestic cotton industry are hurting, but without farmers growing the crop to begin with, the industry
grinds to a halt,” Smith wrote.

A decline in the cotton industry could result in a heavy hit to the state and U.S. economies.

Texas is the largest cotton-producing state—growing 55 percent of the nation’s total acres of cotton.

The value of cash receipts for cotton is the largest of any crop in Texas at $2.2 billion.

“If cotton production declines significantly as a result of persistent low prices, not only will local economies suffer, but the state as a whole will suffer,” Smith wrote.

The cotton industry is caught in a classic cost-price squeeze. And today’s cotton prices are not sufficient to afford higher input costs.

The combination could mean a loss of cotton farmers.

By 2018, nine of 16 farmers could have a cash flow deficit of 50 percent or higher, according to a projection from the Agricultural and Food Policy Center at Texas A&M University.

Half the farms are projected to lose net worth in the same time.

“Of the eight representative farms located in Texas, only one was ranked ‘good’ in terms of long-term economic viability, two were ‘marginal,’ and five were ‘poor,’” Smith wrote.

The problem is complex. The resolution seems much simpler.

If cottonseed is designated as an oilseed, cotton farmers would have a safety net that could help them stay in business.

“This would be a wise step forward for all of agriculture, not just cotton farmers,” Smith wrote.

The designation would require no legislative action.